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| 27th July, 2012 |
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| Weekly Facts |
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Change |
%Change |
| BSE Sensex* |
16,839.19 |
(319.3) |
-1.86% |
| Re/US$ |
55.52 |
(0.4) |
-0.69% |
| Gold Rs/10g |
29,905.00 |
710.0 |
2.43% |
| Crude ($/barrel) |
105.84 |
(0.7) |
-0.68% |
| FD Rates (1-Yr) |
7.25% - 9.25% |
Weekly change as on July 26, 2012
*BSE Sensex as on July 27, 2012
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Impact 
In an effort to make the filing of returns an easy affair for the taxpayers, the Income Tax (I.T.) Department has offered to provide expert services at the door-step of taxpayers. To start with, the service will be provided in the four metros (viz., Mumbai, Delhi, Kolkata and Chennai) and some major cities like Bengaluru, Jaipur, Guwahati, Hyderabad, Lucknow and Patna.
In order to avail of the service at the door-step, taxpayer would be required to log on to tprscheme.com, and therein go to "Register for Home Visit" section. Under the said page you'll be asked to indicate in-short the help required and a convenient date and time when the Tax Return Preparer (TRP) can visit at your address. It is noteworthy that TRPs are self-employed graduates, trained by the department for filing of returns as well as quarterly TDS statements. The department also provides incentive to the TRPs for preparing of returns of tax payers. For the services rendered, the TRPs are allowed to collect a maximum fee of Rs 250 from a taxpayer.
Moreover, in order to provide professional help to resolve tax-payers filing related queries by tax experts through email or phone within 24 hours, the I.T. Department has also started "Online Tax Help".
We are of the view that, the initiative taken by the I.T. Department for providing help to small and marginal tax payers is commendable. This initiative could help many taxpayers to file their tax returns with the help of TRPs, at a reasonable cost. Moreover, having TRPs for filing I.T. returns could even help in employment generation. Having said that, in case there are queries from the I.T. Department, then the services of a qualified and experienced Chartered Accountant are indispensable.
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Impact 
While the Association of Mutual Funds in India is trying all attempts to revive the fortune of the Indian mutual fund industry, the industry yet seems to be under pressure from both regulatory and macro-economic environment (which is making investor wary and nervous).
Speaking about mutual fund participation in the Indian equity market, the year 2012, with gloomy clouds surrounding the global economy and pessimism creeping in has been a big dampener for the Indian mutual fund industry - especially on the equity side of asset management business.
On a year-to-date (YTD) basis, Indian mutual funds have remained net sellers in the Indian equity markets to the tune of Rs 8,445 crore, due to various reasons ranging from the slowdown in the Euro zone and the U.S. to domestic factors like high inflation and unfavourable business conditions.
(Source: ACE MF, PersonalFN Research)
The chart above depicts that while the Indian equity markets started the year 2012 on a positive note, but later the news flow disseminating from the global economy - especially the Euro zone, got Indian mutual funds to be wary and therefore they were net sellers in the Indian equity markets. Moreover, the intermediate fallout in the consolidation phase of the Indian equity markets (BSE Sensex) during the period of May 2012 - June 2012, made equity mutual fund managers cautious over the direction which the Indian equity markets would pave in the near future. At present since investor sentiment for equity being grim, has also led to redemption pressures building in, and encouraged investors to look at other asset classes, such as gold.
We believe that, the consolidation phase in the Indian equity markets will continue for some more time. There could be intermediate fallouts on any negative news disseminating from the developed nations. But, if the developed nations embark on easy money policy to revive their respective economies, emerging nations such as India could see a spurt in the foreign money flowing in and boost in investor sentiments. The reason why they would look at India in such a case of quantitative easing is because India still offers a better economic growth rate as compared to the developed economies.
Investors investing in equity either directly or indirectly should stick to their long term financial plans instead of panic selling. Any fallout by the markets from its consolidation phase should be looked upon as an opportunity to invest further. In volatile market conditions such as these, it would be prudent to adopt the Systematic Investment Plan (SIP) mode of investing as this will help you sail the volatility well, due to rupee-cost averaging and power your portfolio with the benefit of compounding.
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Impact
In its efforts to reduce debt mutual funds' overexposure to specific sectors, the Securities and Exchange Board of India (SEBI) may, on the recommendations of the Mutual Fund Advisory Committee impose a sector cap on the debt mutual fund schemes. At present there is no such sectoral cap. Each fund house decides how much it will invest, in which sector. The proposal to impose a sector cap on the debt mutual fund schemes has been raised after the SEBI observed several debt funds, especially Fixed Maturity Plans (FMPs), were taking huge exposure in specific sectors, raising worries about systemic risk. Imposing a sector cap on the debt mutual fund schemes will bring in diversification benefits to the investors. To know how debt mutual funds will be less risky please click here.
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Impact
Prevention is better than cure. This is one of the most largely followed idioms by us. Right from our daily activities like stepping out of the house on a rainy day, maintaining cleanliness in the house, incurring expenses, etc. to taking an important business decision or providing an investment advice, we most of the times tread with caution. This cautious approach is adopted as it is important to take proper steps or measures to prevent a bad consequence or bad thing from happening, rather than taking corrective steps after some bad event has taken place.
Now take the case of Rajiv Gandhi Equity Savings Scheme (RGESS), which has been introduced as a tax saving scheme for the first time for novice investors, is going through multiple changes before any concrete decision is inked for it. Before framing the final guidelines, the Finance Ministry has addressed to the liquidity issue or the investment management issue and now contemplates on the safety issue of the first time investors under RGESS who are seeking to benefit from this once in a life time tax-saving opportunity. To read our views on whether investing in RGESS is really a safe option, please click here.
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- The subscribers to the Employees Provident Fund will soon be able to file their claims online and get refunds within a short period of time. Moreover, the active subscribers of the EPFO can also get the facility of an e-passbook along with details of their updated accounts online. Apart from streamlining the operations of the country's largest pension fund - EPFO (Employees Provident Fund Organisation), the Labour Ministry is planning a comprehensive amendment in the EPF & Miscellaneous Provisions Act to do away with discretion of officials and curb graft. Even though EPFO has already streamlined operations in most of its offices to dispose of claims within 30 days, it still takes months for the company to send an employee's application, get it processed and refund the money.
We are of the view that, the initiative if implemented, by the EPFO will be beneficial for millions of EPF subscribers as a lot of paperwork will be done away with. However, the EPFO should enhance and upgrade its systems to reflect the latest balance in one's EPF account as at present, the account balance displayed by the EPFO lag by a year.
- Due to reworking of surcharge paid towards various State levies by the Oil Marketing Companies (OMCs), the prices of petroleum products like petrol, diesel, kerosene and cooking gas (LPG) have been hiked in States like Maharashtra, Assam and West Bengal while in others such as Gujarat and Karnataka the prices have declined. Oil companies maintain that this is a revenue-neutral exercise, aimed at adjusting the changes in state taxes.
We are of the view that, the sudden increase in the prices of petroleum products may rejig your household budget temporarily. Since this is just a rework of the surcharge to be paid to the States, the increase in the prices may be rolled back later. But if the diesel prices are decontrolled, we may see a spurt in the food inflation going forward as diesel is the widely used fuel for transportation of food grains, vegetable and other items across the country.
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Surcharge: A fee or other charge that is added to the cost of a good or service. A surcharge is typically added to an existing tax, and may not be included in the stated price of a good or service. It may be a temporary measure to defray the cost of increased commodity pricing, such as with a fuel surcharge, or it may be permanent. A surcharge does not have to be imposed by the government.
Source: Investopedia
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Quote : "Cultivate the habit of early rising. It is unwise to keep the head long on a level with the feet." - Henry David Thoreau
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